Softbank’s Indian Expansion: Plans To Invest $1.5 bn in Paytm; May Invest In BigBasket If It Merges With Grofers

Japanese business conglomerate & investor Softbank is planning a couple of big moves in India. As e-commerce portals are gasping for investments and grocery apps are struggling to survive, Softbank is making some concrete moves to seize the opportunity, and make deep inroads into the Indian Internet and mobile ecosystem.

Way back, Softbank had invested $20 million in Alibaba, which converted into a stake worth $60 billion in 2014, when they listed their company.

Now, Softbank is aiming to repeat that laurel in India, and they have locked their targets.

Softbank May Invest $1.5 billion in Paytm

Paytm, India’s largest digital wallet, and soon to be launched payments bank, may attract an investment of $1.5 billion by Softbank. As per reports, negotiations regarding the same were on since last three months, and now, the things are almost finalised.

SAIF Partners and Paytm founder Vijay Shekhar Sharma may sell off some of their stakes to Softbank, for getting this massive investment, which would be one of the largest Indian financial sector has seen.

Paytm’s valuation would soar to $7-9 billion if this deal gets through. The last valuation of Paytm was $6 billion in March this year when 4.3% stake held by Reliance Capital, SVB (Saama Capital) and SAP Ventures was sold to Alibaba and Ant Financial.

As per some analysts, Paytm has somehow generated this image of ‘Chinese company’, as Alibaba is a major stakeholder in the company. By bringing in Softbank into their company, Paytm can shake off that image, and create a more neutral outlook.

A person familiar with this development said, “Getting SoftBank will help Paytm change the perception of being a Chinese company with the regulators as well as the public..”

Besides, it would be a great opportunity for Softbank to enter into fintech niche, and maybe repeat their success with Alipay in China.

Softbank May Invest in BigBasket If It Merges With Grofers

Meanwhile, Softbank is also in talks to invest close to $100 million in online grocery delivery niche. As per reports coming in, Softbank is talking with BigBasket and Grofers for this investment.

Softbank has already invested in Grofers, and now, they may expand their portfolio into BigBasket as well. However, there is a condition attached here: In order to get the investment, BigBasket may need to merge with Grofers.

And the catalyst here is the valuation of the merged company.

A person familiar with the developments said, “The talks are in early stages, but there is definitely interest from both parties. If the deal happens, SoftBank will invest in the merged entity but a lot hinges on the valuation. The stakeholders are yet to agree on a valuation,”

Although BigBasket is the bigger and more dominant player in this niche, along with Grofers, both are incurring heavy losses, and they both want an investor with a deep pocket to help their operations.

While Big Basket is spending Rs 40 crore, every month, they reported a loss of Rs 278 crore last fiscal, for generating revenue of Rs 580 crore. While Grofers posted a loss of Rs 225 crore, in order to generate revenue of Rs 14.3 crore.

BigBasket has raised $220 million so far, from investors such as Abraaj Group, Bessemer Venture Partners, Sands Capital and International Finance Corp. In the last few months, they had been trying to raise funds from Wal-Mart Stores Inc, Amazon.com Inc, Tencent Holdings Ltd, and Fosun International Ltd.

While BigBasket is hoping to raise funds at a valuation of $700-800 million, Grofers would be happy with a valuation of $150-200 million.

We will keep you updated as more details come in, regarding Softbank’s Indian expansion plans.

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Mohul keenly observes the nuances of Indian startup world; and tries to demystify the secrets behind Technology, Marketing, Mobile and Internet. He is a Writer by passion, Marketer by choice and Entrepreneur by compulsion. Follow him on Twitter here: @_mohul